End of the Year Letter to the Shareholders - 2024

Dear Shareholders,

We reflect on an eventful and challenging year in 2024. Together, we have achieved a lot for the company over the past fiscal year. Our primary goal remains to provide sustainable value to you and your investments while consistently advancing the company’s strategic direction.

Thanks to your trust and our collective efforts, we have made significant progress across various areas and further strengthened our position as a leading incubator and investor in the blockchain industry. This success would not have been possible without your support and confidence in us.

On behalf of the entire Executive Board and Supervisory Board, we extend our sincere gratitude. Your ideas and suggestions have reached us through many channels. As emphasized during our inaugural event in early August, we deeply value this exchange, take all your recommendations seriously, and are committed to their implementation.

Review of 2024

Market and Industry Overview:

2024 in Review: Key Developments in the Crypto Market

The year 2024 was marked by increasingly positive sentiment in the crypto sector. Rising market prices, technical innovations like DePIN or Bitcoin Layer 2, and the growing convergence of blockchain and AI technologies fueled this market dynamism. Political support and renewed confidence from institutional players also positively influenced the industry, setting the stage for an even more successful future.

Bitcoin Reaches a New All-Time High (ATH):

In December 2024, Bitcoin made history by reaching a new all-time high of $108,135. This development was driven by the Bitcoin halving, the approval of several spot ETFs, and sustained high demand from institutional investors such as BlackRock.

User Base Growth:

2024 witnessed a massive influx of new users into the crypto market. According to Chainalysis, the number of active wallets increased by 35% compared to the previous year, driven by simplified access, growing regulatory clarity, and the rising popularity of blockchain applications in areas such as DePIN, RWAs, and DeFi.

Crypto Ownership Growth by Region

‍Positive Political Sentiment Benefits Crypto:

The re-election of Donald Trump in the United States in 2024 brought additional positive momentum to the crypto market. Even before taking office, Trump’s administration signaled openness to cryptocurrencies and blockchain technologies, particularly with the intent to strengthen international competitiveness. This increased institutional investment readiness.

Advanced Blockchain AG: Review 2024 Review

Portfolio Developments, Financial Achievements, Operational Milestones, and Challenges Overcome

Token Sales:

ABAG successfully realized value increases through the sale of existing tokens and claims on future tokens worth more than €2 million, marking a strong start to 2024.

Portfolio Update:

The AVS portfolio valuation as of June 30, 2024, shows that peaq and Mantis remain the largest assets of our top 15 portfolio holdings. Particularly noteworthy is the substantial growth of peaq following its successful token launch. The value of our current stake has increased significantly since June 30, 2024, and trades now around $50 million.

Similar positive developments are also evident in other investments like Panoptic, whose valuation is expected to increase further following key milestones such as its mainnet launch. These developments are expected to be reflected in the next AVS portfolio valuation, highlighting the progress in increasing the value of our portfolio.

Revenue and EBITDA:

Following the publication of the 2023 financials, moderate revenue growth and positive EBITDA were forecasted for 2024, underlining the group’s financial stability. The complete research study by GBC is available at the following link.

Investments and Successes of Portfolio Companies:

• Polymer Labs raised $23 million in a Series A funding round.
• peaq secured $15 million in pre-launch funding and an additional $20 million via CoinList, representing the largest CoinList launch in over two years.
• Krest achieved a value increase of nearly 250%, generating significant returns for Advanced Blockchain AG.
• The peaq mainnet launch established peaq as a German unicorn with a valuation exceeding $2 billion. The value of our position, directly attributable to Advanced Blockchain AG, is estimated at $50–60 million.
• New investments were announced in Silencio and Teneo, both of which are built on the peaq infrastructure.
• ABAG deposited DAI stablecoins and staked Ethereum to farm AO tokens, generating passive income.
• Panoptic successfully launched the full version of its options trading platform, receiving highly positive feedback.

Operational Highlights:

• Leadership Transition:
  In August 2024, Advanced Blockchain AG underwent a significant leadership transition. COO Hatem Elsayed and CFO Maik Laske assumed responsibility to create sustainable shareholder value through a clear, optimized strategy.
• Successful Annual General Meeting:
  The election of business mathematician and SDK representative Tom Jakobi to the Supervisory Board laid the groundwork for stronger governance and improved investor communication.

Current Industry Trends and Future Outlook

1. Decentralized Physical Infrastructure Networks (DePIN):
   With the growing demand for decentralized, interoperable infrastructures, applications in sectors such as IoT, energy, and mobility are becoming increasingly important. These trends signal the beginning of the fusion between the physical and digital worlds.
   
2. Bitcoin Layer-2 Solutions:
   Innovations in scalability and interoperability are turning Bitcoin into a platform for more complex applications, including the ability to generate staking income. These advancements drive broader adoption and open new possibilities for utilizing Bitcoin.
   
3. AI Integration in Blockchain:
   The integration of AI and blockchain is optimizing processes, enabling intelligent automation, and creating new applications. Over the past year, many projects have successfully incorporated AI into their products, leading to groundbreaking technologies such as AI-powered investment platforms and automated transaction processing systems.
   
4. Real-World Assets (RWAs):
   The demand for tokenizing real-world assets has continued to grow in 2024. Tokenization unlocks additional liquidity from traditionally illiquid assets such as real estate or artwork. It also allows investments in fractionalized assets, such as shares in a painting. This technology broadens accessibility and market participation, democratizes investments, and creates long-term growth potential for various asset classes by reaching new audiences.

Analyst Insights:

‍Analysts view these trends as pivotal for 2025. They anticipate that the increasing adoption of blockchain technologies by businesses, investors, and policymakers will further accelerate these developments. The synergy of these trends has the potential to revolutionize not only the blockchain industry but also traditional sectors such as finance, energy, and mobility.

Strategy Outlook 2025: Trust and Forward-Looking Investments

Since entering the capital market in 2017, Advanced Blockchain has established itself as a pioneer and leader in the European blockchain sector. Our new management team, composed of experienced capital market and blockchain experts, builds on the successful venture investment track record of the past and aims to strengthen our leading position through strategic initiatives.

The focus for new investments lies in application areas with high scalability, particularly at the intersection of blockchain technology and the real world. For 2025, we plan investments totaling up to €2 million in forward-looking verticals such as DePIN, interoperability, artificial intelligence, modular blockchains, Bitcoin Layer 2, and real-world assets (RWA). Advanced Blockchain will continue to focus on these verticals in 2025 to create long-term value for its investors and partners.

In parallel, we are optimizing our treasury management through targeted divestments to build a cash reserve of approximately €3 million by year-end and maintain 25% of our funds in liquid blue-chip assets. This approach ensures financial stability and the ability to respond flexibly to market opportunities. Furthermore, we plan OTC sales of up to €4 million for 2025.

Another focus is on strengthening our presence in the capital market. We will expand our corporate communication and transparency efforts to further build trust with our investors. The following initiatives are planned:

1. Quarterly Updates on Sales and Treasury Management: Advanced Blockchain will publish quarterly reports on sales and other income sources, providing details on revenue generated from the sale of specific assets. This will include, for example, staking income from peaq, developments in AO token farming, and the resumption of active trading. This transparency will allow investors to better understand the development of revenue streams.

2. Quarterly Investor Update Calls: To keep investors regularly informed, we will hold quarterly investor calls, providing a platform for questions and the exchange of ideas.

3. Increased Presence at Conferences: Our participation in international conferences will expand, with a particular focus on crypto events. These include key events such as the Global Blockchain Congress in Dubai, the Paris Blockchain Week, Token 2049 in Dubai, and the Berlin Blockchain Week. Additionally, Advanced Blockchain plans to increase its presence at investor conferences, including the Spring Conference of the Equity Forum and the Munich Capital Market Conference.

4. Transparency on Token Unlocks
   
   • NEON, KREST, and PEN token positions from our investments in Neon Labs and Pendulum are currently in the process of unlocking.
   
   • MYSO tokens will be unlocked in January.
   
   • AO tokens are currently being farmed and will be available following the mainnet launch on February 8, 2025. The deployed capital will subsequently be reallocated within treasury management.
   
   • Contango tokens will become tradable in May.
   
   • peaq tokens can only be traded by the group starting in August but are already being staked. 2025 will also mark the launch of various tokens from our portfolio companies, including Mantis, Silencio, and Teneo.
   

5. Enhanced Media Presence: Advanced Blockchain will intensify its digital presence, including participation in virtual panels such as those hosted by the IIF, along with regular updates on portfolio developments via social media. A key focus will be highlighting the discrepancy between the market capitalization of our stock and the significantly higher net asset value (NAV) of our investments.

This combination of strategic initiatives positions Advanced Blockchain to build trust, enhance transparency, and create sustainable value for its investors in 2025 and beyond.

For 2025, we plan to participate in the following events. Additionally, we intend to attend select private banking events and other conferences:

• Q1 2025
  February 2025: Participation in the IIF conference in collaboration with GBC AG
• Q2 2025
  April 2–3, 2025: Participation in the MKK Munich
  May 12–14, 2025: Participation in the Equity Forum Spring Conference in Frankfurt
  June 30, 2025: Planned publication of the 2024 Group Annual Report
• Q3 2025
  August 2025: Planned Annual General Meeting (details to follow)
  October 31, 2025: Planned publication of the 1H 2025 Interim Report
• Q4 2025
  November 24–26, 2025: Participation in the Eigenkapitalforum (EKF) in Frankfurt
  December 31, 2025: Publication of additional relevant information for the 2025 fiscal year 

Outlook for 2025

The year 2025 will be marked by the transformation and implementation of our new business strategy. We aim to further close the gap between NAV and market capitalization through our comprehensive initiatives. With the planned strategic measures and strong collaboration as a team, we look optimistically to the future.

For inquiries, our Investor Relations team is always available to assist you.

Best regards,

Your Advanced Blockchain Team